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Hamilton and Quebec City could support NHL teams, economic think tank says

Growing populations and stronger economies make Hamilton and Quebec options for NHL franchises, says a report by the Conference Board of CanadaThe NHL could feasibly grow in Canada to nine teams, The Conference Board of Canada says. It issued a report saying Hamilton and Quebec City have the population and prosperity for the NHL to thrive

Report co-author Mario Lefebvre argues the success of the recently-relocated Winnipeg Jets proves a team can move to a slightly smaller market and still do well.

The report points out that the Hamilton and Quebec City areas have the same population base as metropolitan Winnipeg – roughly 750,000 people – but stresses both cities are still growing, ensuring a steady supply of fans should the NHL decide to move there.

“The first cutoff is population size, and we view 750,000 as the bare minimum to support an NHL franchise,” Lefebvre says. “Let’s say you have 200,000 die-hard hockey fans. To fill a 20,000-seat rink every night you’d be asking each resident to go to four games (in a season). Four games is a lot of money nowadays.”

The subject of exactly how many NHL teams Canada can support fascinates fans, media and economists from across the country, and last spring researchers from the University of Toronto’s Mowat Centre for Policy innovation suggested 12 franchises could thrive here.

That estimate was based on Toronto, Montreal and Vancouver each picking up a second franchise.

But University of Ottawa professor Norm O’Reilly says there’s a crucial distinction between whether a city has enough fans to sustain a team, and whether bringing a team there makes business sense.

He says Toronto’s population, passionate fan base and corporate support could sustain several NHL franchises, but stresses that other factors complicate the equation.

A new team in Hamilton or Toronto would have to pay the Leafs and possibly the Buffalo Sabres a fee for setting up shop in their territory. They would then have to spend hundreds of millions more to build, renovate or rent an arena.

Quebec City, meanwhile offers a smaller market than Hamilton does but with a simpler setup process.

“It’s more than just whether a team can survive or not,” says O’Reilly, who specializes in sport business. “From a market feasibility (standpoint) Toronto could support three, four, five NHL teams. But (in terms of franchise viability) – competitive nature, league approvals, sharing of media rights, owners that would be willing to support a team and lose money – that number goes down a lot. Does an owner even exist who wants to plop another billion dollars into a team?”

Sports marketing consultant Cary Kaplan also finds the conference board’s estimate conservative. He says the focus on market size rules out teams that could compensate for a small population base with commitment, citing the examples of the NFL’s Green Bay Packers and the CFL’s Saskatchewan Roughriders.

“The Atlanta Thrashers would pass their (population) test way ahead of Winnipeg, but Winnipeg’s a way better market,” says Kaplan, former president of the AHL’s Hamilton Bulldogs. “You can’t look at corporate and economic factors as the imperative.”

But Lefebvre says you have to exactly that.

While a strong Canadian dollar makes paying players in U.S. dollars easier, he points out ticket sales make up a shrinking portion of revenues for major sports teams. And as ticket prices rise, the importance of corporate support increases.

“They need those corporate boxes,” Lefebvre says. “If you can fill the rink with 18,000 people every night, great. But if you can have in addition to that 50 corporate boxes, on top of sponsorship that’s an incredibly welcome additional income.”

Quebec City is home to 17 of Canada’s 800 biggest corporations, according to the report, while Hamilton benefits from its proximity to the hundreds of corporations based in Southern Ontario.

Can you picture the NHL with nine Canadian franchises?

The Conference Board of Canada can, and Thursday morning the Ottawa-based economic think tank issued a report explaining that if the NHL decided to expand further into Canada, franchises would thrive in Quebec City and Hamilton.

Thursday’s report is the 12th in the conference board’s Playing in the Big Leagues series, which examines the factors influencing the pro sports industry in Canada.

And according to the report, the chief factor affecting the NHL’s viability in Quebec City and Hamilton is population.

While conference board researchers first believed an NHL franchise needed a population base of at least 1 million people to prosper, the success of the recently-relocated Winnipeg Jets proves a team can move to a slightly smaller market and still do well.

The report points out that the Hamilton and Quebec City areas have a the same population base as metropolitan Winnipeg – roughly 750,000 people – but stresses both cities are still growing, ensuring a steady supply of fans should the NHL decide to move there.

Several other factors affect a city’s ability to sustain an NHL franchise, the report says, including disposable income and the presence of corporations in the area. The report says Hamilton and Quebec City score high in both areas.

But whether NHL teams will actually soon settle in either city is still pure speculation.

The last round of expansion came in 2000-2001, when the addition of the Minnesota Wild and Atlanta Thrashers grew the league to 30 teams.

After last season the Thrashers moved to Winnipeg, where the resurrected Jets franchise averages 15,004 for home games, which is a sellout crowd at Nationwide Arena.

Since that move rumours have swirled that the NHL-owned Phoenix Coyotes might move, but their most talked-about landing spot is Seattle, where the NHL has never had a franchise.

Last April economists at the University of Toronto’s Mowat Centre for Policy innovation issued a report concluding that 12 NHL franchises could survive profitably in Canada.

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